What You Need to Know About Taxes for a Sociedad Limitada
Tax obligations of an S.L.
When setting up a Spanish S.L., you will face various tax obligations. It is important to understand these well so that you meet all legal requirements and avoid possible penalties.
Corporate tax (Impuesto sobre Sociedades).
An S.L.pays corporate tax on the profits it makes. New companies in Spain are subject to a reduced rate of 15%. However, this rate is limited to two specific tax periods:
- The first period in which the company earns profits.
- The period immediately following it, regardless of whether there is profit or loss.
How does it work in practice?
Suppose a company operates for only a few months in the first year and makes a profit. In that case, the 15% rate applies for both that year and the next full tax year. After that, the standard rate is applied:
- 23% for companies with sales below €1,000,000.
- 25% for companies with sales above €1,000,000.
What if there is a loss in the first year?
If the company suffers a loss in the first tax period, the reduced 15% rate remains available. It is then applied to the next two tax periods in which a profit is made. This offers companies additional flexibility in their start-up phase.
Important to know
The application of the 15% rate depends entirely on when the company first makes a profit. This makes the scheme attractive to startups because it helps them have lower tax costs in the early years.
Value Added Tax (VAT - IVA)
The IVA is the Spanish version of VAT. If your company sells goods or provides services, you must charge IVA and remit it to the tax authorities. The standard IVA rates are:
- 21% standard rate
- 10% reduced rate for certain goods and services
- 4% super-reduced rate for essential goods
Income Tax Withholding (IRPF - Impuesto sobre la Renta de las Personas Físicas)
If you have employees, you must withhold income tax from their salaries and remit it. This also includes social security contributions.
Social Security Contributions
As an employer, you’re required to pay social security contributions for your employees. The percentages vary depending on the type of contract and the salary.
Filing Corporate Tax and Deadlines
The fiscal year of a Spanish S.L. usually aligns with the calendar year unless you indicate otherwise. Important deadlines are:
- Annual return: Within 25 days after six months following the end of the fiscal year.
- Provisional payments: Three times a year, in April, October, and December.
VAT Filing and Payment
You usually submit VAT returns quarterly, but with higher turnover, this may need to be done monthly. The return must be filed within 20 days after the end of the relevant period.
Tax Benefits and Deductions for Your S.L.
There are various deductions and tax benefits you can utilize as an S.L., such as:
- Investments in research and development
- Costs for staff training
- Environmentally friendly investments
Obtain your Digital Certificate entirely remotely.
Request your Digital Certificate completely remotely.
